2010-09-11

IMF Sells 10 Tons Gold to Bangladesh

The International Monetary Fund, which set out a year ago to sell about 13 percent of its gold holdings, sold 10 metric tons to Bangladesh for $403 million.

The transaction brings total central bank purchases from the fund to 222 tons, according to fund data. India has bought 200 tons, Sri Lanka 10 tons and Mauritius 2 tons. A further 88.3 tons has been sold under the agency’s “on-market” sales program, it said in a statement yesterday.

The lender’s executive board approved the sale of 403.3 tons of bullion on Sept. 18 last year as part of a plan to shore up its finances and lend at reduced rates to low-income countries. After selling only to central banks, it expanded sales to the open market in February.

The transaction “will push gold higher as central bank purchases have traditionally been a major factor fueling the price,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Central banks want to diversify their reserves because of the unstable dollar and we may see more buying down the road.”
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I'm surprised China hasn't bought any gold yet. Everybody was criticizing their dollar and treasury holdings, including themselves but let's face reality: both have soared in value in the past several months, so in the end, it wasn't such a bad investment.

Let's see if they will hold to them until they fall back in value. In the meantime, I'm still thinking they will buy gold from IMF.